Health and life insurance: protecting you together

Ensuring you’re financially protected should something happen to you takes a holistic approach. Different life insurance options in addition to your health insurance are available to protect you and your loved ones. Knowing these options can be beneficial when you are deciding on the right level of protection for your personal circumstances.

Your health insurance covers you, and anyone else on your policy, for the treatment of specific health conditions. Hospital cover provides benefits when you are admitted and treated as an inpatient in hospital and helps to cover hospital, medical and ambulance expenses. Extras cover on the other hand provides benefits towards healthcare services not covered by Medicare such as dental, optical, physiotherapy and psychology. Your health insurance is automatically reported within your annual tax return and holding an appropriate level of hospital cover means you are exempt from paying the Medicare Levy Surcharge.

A common belief is that the benefits of life insurance are realised after one's death for their nominated beneficiaries. In fact, life insurance includes a broad range of cover options that are designed to protect you from different life events that can occur - not just death.

Life cover

Life cover pays a lump sum when the insured person dies or is diagnosed with a terminal illness. It can be held personally or by another entity for business purposes. The premiums can be paid either inside or outside of superannuation.

Income protection cover

Income protection pays a portion of the insured person’s usual income for an agreed period if they can’t work due to illness or injury. The benefit is usually around 75% of your income. Income protection can be held personally, inside superannuation, or by another entity for business purposes. It does not cover redundancy, resignation, or termination from employment.

Of the main life insurance products, only the premium paid for income protection cover is tax deductible. An exception to making this deduction is if the policy is held through your superannuation fund and the premiums are deducted from your super contributions.

Trauma cover

Trauma cover pays a lump sum for common, prescribed serious illnesses or injuries to provide financial support while the insured person is in recovery. A successful claim is based on meeting specific criteria relating to the illness or injury and is not related to whether the insured person can still work. The list of illnesses covered by trauma cover and how these illnesses are defined vary between policies but will generally cover the most common medical events such as cancer, heart conditions and stroke. Trauma cover can be held personally or by another entity for business purposes, but it cannot be held by a superannuation fund, except in rare, legacy cases.

Total and permanent disability cover

Total and permanent disability (TPD) cover pays a lump sum in the event the insured person becomes totally and permanently disabled and is unlikely to ever work again. Like with the illnesses defined in different trauma cover policies, there are also different definitions of disability, which may impact the level of invalidity required for a claim to be successful. Like life cover and income protection, TPD cover can be held personally, inside superannuation, or by another entity for business purposes.

Unlike health insurance, not all types of life insurance premiums have an impact on tax.

Premium and costs

Health insurance and life insurance have some important distinctions.

Health insurance is based on a system called community rating. This means your health status or claims history cannot influence the price of your policy, and everyone pays the same amount regardless of the number of times they need to access health services. The price of policies vary based on the number of services covered, the policy holder’s state or territory of residence, and government initiatives such as Lifetime Health Cover loading and the private health insurance rebate.

With life insurance, your premiums can change because of risk-based pricing. Factors that can influence the cost of your coverage could include:

• personal lifestyle factors such as drinking, smoking, and exercise levels
• occupation of the policyholder
• medical history such as any pre-existing conditions or an extensive medical history
• age which could play a big role in determining policy premiums.

By having both health insurance and life insurance in place, you can create a more comprehensive safety net that protects you and your family from various financial risks associated with illness, injury and death. This combination can help ensure that your loved ones are taken care of financially, regardless of what may happen to you.

How can Avant help you protect you and your loved ones?

If you’re dedicating your life to looking after others, you need the peace of mind that someone is looking after you.

 At Avant, we have assessed leading life insurance providers and developed a shortlist of policies we believe suit doctors best. You can access cover in two ways:

• The Avant Life Insurance Selection Tool gives you a curated shortlist with a simple phone application when you are ready.
• Complimentary personal advice from a qualified financial adviser — available by phone or video, gives you access to a wider range of policies tailored to your situation.